Inflation Report - banxico.org.mx€¦ · Inflation Report November 7, 2012 July–September 2012 1...

Inflation Report

November 7, 2012

July–September 2012

1

2

Outline

External Conditions 1

Economic Activity in Mexico 2

Monetary Policy and Inflation Determinants

3

Forecasts and Balance of Risks 4

Inflation Report July-September 2012

3

External Conditions The growth rate of the world economy kept losing its dynamism:

In the U.S., economic growth remained moderate.

In the Euro Zone, economic activity is expected to have contracted further.

In emerging countries, economic growth continued decelerating.

In an environment characterized by weak growth of the world economic activity and lower commodity prices, the following is anticipated in most economies:

Inflation is expected to moderate by the end of 2012 and in 2013.

Further monetary policy easing is anticipated.


4

In the U.S., industrial production has lost dynamism and employment recovery has not consolidated.

80

85

90

95

100

105

Jan

-08

Au

g-0

8

Mar

-09

Oct

-09

May

-10

Dec

-10

Jul-

11

Feb

-12

Sep

-12

Industrial Production

Manufacturing Production

U.S.: Industrial and Manufacturing Production

Index Jan-2007=100; s.a.

U.S.: Unemployment Rate and Employment-Population Ratio

%; s.a.

s.a./ Seasonally adjusted. Source: U.S. Federal Reserve.

s.a./ Seasonally adjusted. Source: Bureau of Labor Statistics (BLS).


50

52

54

56

58

60

62

64

66

0

2

4

6

8

10

12

Jan

-00

Oct

-00

Jul-

01

Ap

r-0

2

Jan

-03

Oct

-03

Jul-

04

Ap

r-0

5

Jan

-06

Oct

-06

Jul-

07

Ap

r-0

8

Jan

-09

Oct

-09

Jul-

10

Ap

r-1

1

Jan

-12

Oct

-12

Unemployment rate

Employment-population ratio (left axis)

5

In the Euro zone, fiscal and credit adjustments continued negatively affecting economic activity.

Euro Zone: Industrial Production

Index Jan-2007=100; s.a.

Euro Zone: Public Balance % of GDP

Euro Zone: Credit of Financial Institutions

to Private Sector Annual % change

s.a./ Seasonally adjusted. Source: Eurostat.

1/ Public Balance without Pemex investment. Source: Fiscal Monitor (IMF) and Mexico’s Ministry of Finance (SHCP).

Source: European Central Bank.

Au

g-1

2

-2

0

2

4

6

8

10

12

14

Jan

-07

No

v-0

7

Sep

-08

Jul-

09

May

-10

Mar

-11

Jan

-12

Sep

-12

-18

-16

-14

-12

-10

-8

-6

-4

-2

0

2

4

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

GreeceItalyPortugalSpainGermanyFranceMexico 1/

Forecast

60

70

80

90

100

110

120

130

Jan

-07

No

v-0

7

Sep

-08

Jul-

09

May

-10

Mar

-11

Jan

-12

Euro Zone Greece

Italy Portugal

Spain Germany

France


6

Measures announced by financial authorities in main advanced economies contributed to improved conditions in international financial markets.

0

200

400

600

800

1,000

1,200

1,400

1,600

Jan

-10

Jun

-10

No

v-1

0

Ap

r-1

1

Sep

-11

Feb

-12

Jul-

12

Germany

Spain

France

Italy

Portugal

Mexico

Credit Default Swaps 1/

Basis points 3-month Libor-OIS and

Euribor-EONIA Spread 2/

Spread in basis points

1/ 5-year CDS. On September 6, the European Central Bank announced its new program of sovereign bond buying. Source: Bloomberg.

2/ For United States it refers to the 3-month Libor-OIS spread, and for the euro area it refers to the 3-month Euribor-EONIA spread. On September 6, the European Central Bank announced its new program of sovereign bond buying. Source: Bloomberg.

6-Sep-12


0

20

40

60

80

100

120

Jan

-10

Jun

-10

No

v-1

0

Ap

r-1

1

Sep

-11

Feb

-12

Jul-

12

U.S.

Euro Zone

6-Sep-12

No

v-1

2

No

v-1

2

7

Improved international financial conditions contributed to a rebound in capital flows towards emerging markets.

-80

-60

-40

-20

0

20

40

60

80

100

120

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

2008

2009

2010

2011

2012

Emerging Economies: Accumulated Capital Flows (Debt and Equity)

Billions of dollars

Emerging Economies: Exchange Rate 1/

Index 1-Jan-2008=100

Source: Emerging Portfolio Fund Research. 1/ On September 6, the European Central Bank announced its new program of sovereign bond buying. Source: Bloomberg.

Weeks

80

90

100

110

120

130

140

150

160

170

Jan

-08

Jun

-08

No

v-0

8

Ap

r-0

9

Sep

-09

Feb

-10

Jul-

10

Dec

-10

May

-11

Oct

-11

Mar

-12

Au

g-1

2

Brazil

Chile

Colombia

Korea

Mexico

6-Sep-12

Depreciation against USD


No

v-1

2

8

The deterioration of global growth prospects, together with better production outlook, suggest lower commodity prices.

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

Jan

-00

Dec

-00

No

v-0

1

Oct

-02

Sep

-03

Au

g-0

4

Jul-

05

Jun

-06

May

-07

Ap

r-0

8

Mar

-09

Feb

-10

Jan

-11

Dec

-11

No

v-1

2

Brent

WTI

International Price of Crude Oil

Dollars per barrel

0

2

4

6

8

10

12

14

Jan

-00

Dec

-00

No

v-0

1

Oct

-02

Sep

-03

Au

g-0

4

Jul-

05

Jun

-06

May

-07

Ap

r-0

8

Mar

-09

Feb

-10

Jan

-11

Dec

-11

No

v-1

2

Corn

Wheat

International Price of Grains Dollars per bushel

Source: Bloomberg. Source: Bloomberg.


9

Inflation in 2012 and 2013 is expected to be lower than in 2011 in most countries.


World Inflation %

Source: International Monetary Fund.

0

1

2

3

4

5

6

7

8

9

10

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

World

Advanced

Emerging

Forecast

10

Outline




3



11

During the third quarter of 2012 economic activity in Mexico kept expanding, although it started showing signs of slowdown.

95

105

115

125

135

145

155

165

175

185

95

100

105

110

115

120

125

130

135

140

Jan

-07

Au

g-0

7

Mar

-08

Oct

-08

May

-09

Dec

-09

Jul-

10

Feb

-11

Sep

-11

Ap

r-1

2

Total Industrial Services Agricultural (left axis)

Global Indicator of Economic Activity (IGAE)

Index 2003=100; s.a.

Manufacturing Exports by Region of Destination Index 2007=100; s.a.

s.a./ Seasonally adjusted and trend data. Source: INEGI.

s.a./ Seasonally adjusted and trend data. Source: Banco de México.

Au

g-1

2


70

90

110

130

150

170

190

Jan

-07

May

-07

Sep

-07

Jan

-08

May

-08

Sep

-08

Jan

-09

May

-09

Sep

-09

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Total

U.S.

Others

12

Private consumption exhibited a growing trend, even when some of its determinants slowed down.

110

112

114

116

118

120

122

124

126

128

130

Jan

-07

No

v-0

7

Sep

-08

Jul-

09

May

-10

Mar

-11

Jan

-12

70

75

80

85

90

95

100

105

110

115

Jan

-07

Au

g-0

7

Mar

-08

Oct

-08

May

-09

Dec

-09

Jul-

10

Feb

-11

Sep

-11

Ap

r-1

2

Commercial Establishments’ Retail Sales

Index 2003=100; s.a.

Consumer Confidence Index Jan-2003=100; s.a.

Commercial Banks’ Performing Credit for Consumption

Real annual % change

s.a./ Seasonally adjusted data. Source: INEGI.

s.a./ Seasonally adjusted data. Source: INEGI and Banco de México.

1/ Includes credit for the acquisition of property and automobile credits. 2/ “Others” refers to personal credits, credit for payable leasing operations and other consumption credits. Source: Banco de México.

Oct

-12

Au

g-1

2 -40

-30

-20

-10

0

10

20

30

40

50

Jan

-08

Sep

-08

May

-09

Jan

-10

Sep

-10

May

-11

Jan

-12

Sep

-12

Total Credit cards Durable goods 1/ Payroll and others 2/



13

Gross fixed investment presented slower growth in the third quarter of 2012.

85

95

105

115

125

135

145

155

165

175

Jan

-07

Dec

-07

No

v-0

8

Oct

-09

Sep

-10

Au

g-1

1

Jul-

12

Total Machinery and equipment Construction

Investment and its Components Index 2005=100; s.a.

Producer Confidence Index 50 points reference; s.a.

Domestic Financing to Non-Financial Private Firms Real annual % change

s.a./ Seasonally adjusted. Source: INEGI.

s.a./ Seasonally adjusted data. Source: INEGI and Banco de México.

Source: Banco de México.

Sep

-12

-15

-10

-5

0

5

10

15

20

25

30

35

Jan

-07

No

v-0

7

Sep

-08

Jul-

09

May

-10

Mar

-11

Jan

-12

Total

Credit

Issuance

30

35

40

45

50

55

60

Jan

-07

Oct

-07

Jul-

08

Ap

r-0

9

Jan

-10

Oct

-10

Jul-

11

Ap

r-1

2

Oct

-12

14

Outline




3



15


In recent months monetary policy faced a difficult situation, characterized by the following factors:

Weakening of external demand started to affect economic activity, with the possible impact on inflation in Mexico.

A series of supply-related shocks led to a rebound in inflation, which, although expected to be temporary, has been persistent and of considerable magnitude.

After balancing the referred risks, the Board of Governors decided to maintain the Overnight Interbank Interest Rate at 4.5 percent, although it has repeatedly expressed concern regarding the evolution of inflation determinants.


16


During the third quarter of 2012, average annual headline inflation increased and exceeded the upper bound of the variability interval around the established target.

This evolution is mainly accounted for by increases in agricultural products’ prices.

• Four products with the highest incidence on inflation stand out: egg, chicken, beef and tomato.

Keeping in mind the transitory character of shocks affecting inflation, the referred increase is estimated to be temporary, although these shocks’ persistence has become a reason for concern.


17

Higher annual headline inflation is mainly explained by the increase in some food prices.

Consumer Price Index Annual % change

Source: Banco de México and INEGI.


1

2

3

4

5

6

7

8

9

10

11

12

Jan

-07

May

-07

Sep

-07

Jan

-08

May

-08

Sep

-08

Jan

-09

May

-09

Sep

-09

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

CPI

Core

Non-core

18

The behavior of annual core inflation has been the consequence of an adjustment in some products’ relative prices, rather than generalized price increases in the economy.

Subindices of Core Merchandise Prices

Annual % change

Subindices of Core Services Prices

Annual % change

CPI Excluding Food and Energy 1/

Annual % change

Source: Banco de México and INEGI. Source: Banco de México and INEGI. 1/ Excluding food at home (raw and processed foods and non-alcoholic beverages), food outside home, and energy. Source: Banco de México and INEGI.


0

1

2

3

4

5

6

7

8

9

10

Jan

-07

No

v-0

7

Sep

-08

Jul-

09

May

-10

Mar

-11

Jan

-12

Merchandise Food, beverages and tobacco Non-food merchandise

0

1

2

3

4

5

6

7

8

9

10

Jan

-07

No

v-0

7

Sep

-08

Jul-

09

May

-10

Mar

-11

Jan

-12

Services

Housing

Education (tuition)

Other services

0

1

2

3

4

5

6

7

8

9

10

Jan

-07

No

v-0

7

Sep

-08

Jul-

09

May

-10

Mar

-11

Jan

-12

CPI

CPI excluding food and energy

Sep

-12

Sep

-12

Sep

-12


19

Non-core inflation increased due to the performance of agricultural products’ prices, driven by climatic and sanitary conditions.

Non-core Inflation and Components Annual % change

Subindex of Livestock Products Prices Annual % change

Source: Banco de México and INEGI. Source: Banco de México and INEGI.

-20

-10

0

10

20

30

40

50

Jan

-07

Au

g-0

7

Mar

-08

Oct

-08

May

-09

Dec

-09

Jul-

10

Feb

-11

Sep

-11

Ap

r-1

2

Eggs

Beef

Chicken

-5

0

5

10

15

20

Jan

-07

Au

g-0

7

Mar

-08

Oct

-08

May

-09

Dec

-09

Jul-

10

Feb

-11

Sep

-11

Ap

r-1

2

Non-core

Agricultural

Energy and government approved fares

Sep

-12

Sep

-12

20

The output gap has remained around zero.

Output Gap 1/

% of potential output; s.a.

s.a./ Calculated with seasonally adjusted data. 1/ Estimated using the Hodrick-Prescott (HP) filter with tail correction method; see Banco de México (2009), “Inflation Report April–June 2009”, p.69. The shaded area is the 95% confidence interval of the output gap, calculated with an unobserved components method. 2/ GDP figures up to the second quarter of 2012; IGAE up to August 2012. Source: Calculated by Banco de México with data from INEGI.


Au

g-1

2 -14

-12

-10

-8

-6

-4

-2

0

2

4

6

8

Jan

-04

Jun

-04

No

v-0

4

Ap

r-0

5

Sep

-05

Feb

-06

Jul-

06

Dec

-06

May

-07

Oct

-07

Mar

-08

Au

g-0

8

Jan

-09

Jun

-09

No

v-0

9

Ap

r-1

0

Sep

-10

Feb

-11

Jul-

11

Dec

-11

May

-12

GDP 2/

IGAE 2/


21

Diverse labor market indicators kept recovering.

13.4

13.6

13.8

14.0

14.2

14.4

14.6

14.8

15.0

15.2

15.4

15.6

15.8

16.0

16.2

Jan

-07

Au

g-0

7

Mar

-08

Oct

-08

May

-09

Dec

-09

Jul-

10

Feb

-11

Sep

-11

Ap

r-1

2

Original

Seasonally adjusted

IMSS-insured Workers 1/

Million workers

2

3

4

5

6

7

Jan

-05

Sep

-05

May

-06

Jan

-07

Sep

-07

May

-08

Jan

-09

Sep

-09

May

-10

Jan

-11

Sep

-11

May

-12

National Unemployment Rate %; s.a.

1/ Permanent and temporary workers in urban areas. Source: IMSS and seasonally adjusted by Banco de México

s.a./ Seasonally adjusted. Source: National Employment Survey (Encuesta Nacional de Ocupación y Empleo), INEGI.

Sep

-12

Sep

-12


22

Although it is not a widespread phenomenon, some wage negotiations reached higher increases than those registered in the past.

IMSS Reference Wage 1/

Annual % change Contractual Wage 2/

Annual % change

1/ The IMSS reference wage (Salario base de cotización, SBC) considers the daily average earnings of IMSS-insured workers during a certain period and some fringe benefits (e.g., end-of-year bonuses, vacation bonuses and commissions). Source: Calculated by Banco de México with data from IMSS and STPS.

2/ The number of workers in firms under federal jurisdiction that annually report their wage increases to the Secretary of Labor and Social Welfare (Secretaría del Trabajo y Previsión Social) equals approximately 2 million. Source: Calculated by Banco de México with data from IMSS and STPS.

4.2 4.5

2

3

4

5

6

7

8

I 200

8 II III IV

I 200

9 II III IV

I 201

0 II III IV

I 201

1 II III IV

I 201

2 II III

4.8 4.7

2

3

4

5

6

7

8

I 200

8 II III IV

I 200

9 II III IV

I 201

0 II III IV

I 201

1 II III IV

I 201

2 II III

Total

Public firms

Private firms

23

Medium- and long-term inflation expectations remained stable.

Inflation Expectations for the End of 2012

%

Headline Inflation Expectations %

Break-even Inflation and Inflationary Risk 1/

%

Source: Banco de México’s survey. Source: Banco de México’s survey. 1/ The break-even inflation and inflationary risk implicit in 10-year bonds is calculated based on nominal and real interest rates of the secondary market. Source: Banco de México estimate with data from Valmer.

No

v-1

2


3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

Jan

-10

Ap

r-1

0

Jul-

10

Oct

-10

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Headline

Core

Non-core

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Jan

-10

Ap

r-1

0

Jul-

10

Oct

-10

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

End 2013

Next 4 years

Next 5-8 years

Variability interval

3.00

3.25

3.50

3.75

4.00

4.25

4.50

4.75

5.00

5.25

5.50

Jan

-05

Mar

-06

May

-07

Jul-

08

Sep

-09

No

v-1

0

Jan

-12

10-year bond break-eveninflation20-day moving average

24

The national currency registered an appreciation trend in the reference period and securities’ holdings by foreign investors kept rising. Exchange Rate and its Expectations for the

End of 2012 and 2013 1/

Pesos per dollar

Government Securities Holdings by Foreign Investors Billions of pesos

1/ The observed exchange rate is the daily FIX exchange rate. The latest data for the observed exchange rate is November 5, 2012 and the foreign exchange rate forecasts is November 5, 2012. Source: Banco de México and Banamex survey.

Source: Banco de México.

13.04 12.79 12.54


10

11

12

13

14

15

16

Mar

-08

Jul-

08

No

v-0

8

Mar

-09

Jul-

09

No

v-0

9

Mar

-10

Jul-

10

No

v-1

0

Mar

-11

Jul-

11

No

v-1

1

Mar

-12

Jul-

12

No

v-1

2

Observed

Expectations End 2012

Expectations End 2013

0

100

200

300

400

500

600

700

800

900

1,000

Jan

-08

Jun

-08

No

v-0

8

Ap

r-0

9

Sep

-09

Feb

-10

Jul-

10

Dec

-10

May

-11

Oct

-11

Mar

-12

Au

g-1

2

Bonds

CETES

Oct

-12


25

The aforementioned, together with stable longer-term inflation expectations, caused domestic interest rates to remain stable as well.

3

4

5

6

7

8

9

10

11

12

Jul-

07

Mar

-08

No

v-0

8

Jul-

09

Mar

-10

No

v-1

0

Jul-

11

Mar

-12

No

v-1

2

1 day

3 month

1 year

10 year

30 year

Interest Rates of Government Securities 1/

%

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

1 1 3 6 1 2 3 5 10 20 30

30-Dec-11

29-Mar-12

29-Jun-12

05-Nov-12

day months years

Mexico’s Yield Curve %

1/ Since January 21, 2008, the one-day (overnight) interest rate corresponds to the target for the Overnight Interbank Interest Rate. Source: Banco de México and Proveedor Integral de Precios (PiP).

Source: Banco de México and Proveedor Integral de Precios (PiP).

26


So far, the evolution of different inflation determinants suggests the following:

i. That the above referred supply shocks, even when they have been successive, have not contaminated so far the price formation process of the economy.

ii. That there is no evidence indicating aggregate demand-related pressures on inflation.

iii.Some wage increases higher than in previous months have been observed, albeit mainly in the public sector.

However, in this context:

With inflation at high levels during various months due to the persistence of shocks,

With the output gap around zero,

→ The risk of the price formation process being contaminated cannot be ruled out.


27

Outline




3



28

Fan Chart: GDP Growth Annual %; s.a.

Fan Chart: Output Gap 1/

%

s.a./ Seasonally adjusted. Source: INEGI and Banco de México

1/ Calculated with seasonally adjusted data. Source: Banco de México.

2011 Q4

2010 2013 2008 2009 2011 2012

2012 Q4

2013 Q4

2011 Q4

2012 Q4

2013 Q4

2010 2013 2008 2009 2011 2012

GDP growth:

Between 3.5 and 4.0% in 2012.

Between 3.0 and 4.0% in 2013.

Increase in the number of IMSS-insured workers:

Between 600 and 700 thousand in 2012.

Between 500 and 600 thousand in 2013.

Forecasts for the Mexican Economy:


-9-8-7-6-5-4-3-2-10123456789

Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4

-7

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4

29

Balance of Risks for the Economic Activity.

Downward risks have increased due to prevailing factors that could induce a more unfavorable environment for the Mexican economy:

A more pronounced slowdown of the U.S. economy.

An environment of increased volatility and uncertainty in international financial markets, if no progress is made in solving the fiscal and banking problems in the Euro Zone.

The slowdown of emerging economies, like Brazil, China and India, could intensify, further affecting global demand.

As opposed to the risks mentioned before, the growth scenario for Mexico could be favorably affected by the approval and implementation of structural reforms that strengthen domestic sources of growth.


30

Headline inflation is anticipated to have changed its trend in September and the following elements are expected to contribute to its further downward trajectory:

A global environment of weak growth.

Absence of considerable demand pressures on the Mexican economy, even if the degree of slackness in the labor market has decreased.

Intensified competition in some sectors.

Fading of the effect that some food price shocks had on inflation during 2012.

The MXN appreciation after the announcement of a further round of monetary easing (QE3) in the U.S.

Core inflation is also expected to have changed its trend since August 2012.

Inflation Forecasts


31

It is estimated that annual headline inflation will be very close to 4 percent at the end of 2012 and will locate between 3 and 4 percent in 2013.

Annual Headline Inflation 1/

% Annual Core Inflation 2/

%

1/ Quarterly average of annual headline inflation. Source: INEGI and Banco de México.

2/ Quarterly average of annual core inflation. Source: INEGI and Banco de México.

Fan Charts

2008 2010 2012 2006 2008 2010 2012 2006


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4

Observed Inflation

Headline Inflation Target

Variability Interval

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4

Observed Inflation

Headline Inflation Target

Variability Interval

2011 Q4

2012 Q4

2013 Q4

2011 Q4

2012 Q4

2013 Q4

32

In an environment where the output gap has closed, the following risks stand

out:

The situation prevailing in the national production of eggs.

Unfavorable climatic conditions in North America that affected international grain and

meat product prices.

The possibility of new increases in agricultural products’ prices, derived from these

products’ affected production.

The possibility that prices and/or fares of public goods and services increase more

than foreseen.

The return of volatility in international financial markets that cannot be ruled out.

Derived from the fact that inflation has remained at high levels during various

months:

• The risk of observing a contamination of the wage setting process in the economy.

• The risk that the elevation of inflation above the upper bound of the variability

interval around the 3 percent target is a topic that received more public attention.

However, upward risks to inflation have increased.


33

Monetary Policy Stance

Considering the aforementioned, the Board of Governors estimates that if inflation shocks persist, even if presumed as transitory, and the changes in the trend of headline and core inflation are not confirmed, it would be appropriate to adjust upwards the reference rate in the near future, in order to:

Consolidate the anchor of inflation expectations.

Prevent the contamination of the rest of the price formation process in the national economy.

Avoid jeopardizing the convergence of inflation to the 3 percent permanent target.


34

It is necessary to strengthen domestic sources of growth.

Together with the environment of macroeconomic stability reached by Mexico, necessary for its economic development, the progress in the economy’s structural change could boost the country’s economic growth, especially in the medium and long run.

These reforms would also favor the maintenance of a low and stable inflation environment.

Indeed, rising productivity would allow reaching higher aggregate demand growth rates without generating pressures on prices.


Inflation Report - banxico.org.mx€¦ · Inflation Report November 7, 2012 July–September 2012 1...

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